Segment Information

12 Months Ended

Dec. 31, 2016

Segment Information [Abstract]

Segment Information

Note 23.Segment Information

FASB ASC Topic 280, “Segment Reporting” (“ASC Topic 280”) established standards for public business enterprises to report information about operating segments in their annual financial statements and requires that those enterprises report selected information about operating segments in subsequent interim financial reports issued to shareholders.  It also established standards for related disclosure about products and services, geographic areas, and major customers.  Operating segments are components of an enterprise, which are evaluated regularly by the chief operating decision makers in deciding how to allocate and assess resources and performance.  Our chief operating decision makers are the CEO and the CFO.  We have identified our reportable operating segments as “Community Banking” and “Tax Liens”.

Community banking

Our community banking segment consists of commercial and retail banking and equipment leasing. The community banking business segment includes Royal Bank and Royal Bank Leasing and generates revenue from a variety of products and services provided by those entities.  Royal Bank and Royal Bank Leasing have similar economic characterisitcs in that earnings are predominantly derived from net interest income.  For example, commercial lending is dependent upon the ability of Royal Bank to fund cash needed to make loans with retail deposits and other borrowings and to manage interest rate and credit risk.

Tax liens

At December 31, 2016, Royal Bank’s tax liens segment includes its 80% and 100% ownership interest in CSC and RTL, respectively.  Prior to December 31, 2013, Royal Bank’s ownership interest in CSC and RTL was 60%.  The Company’s tax liens segment consisted of purchasing delinquent tax certificates from local municipalities at auction and then processing those liens to either encourage the property holder to pay off the lien, or to foreclose and sell the property.  The tax liens segment earns income based on interest rates (determined at auction) and penalties assigned by the municipality along with gains on sale of foreclosed properties. CSC is liquidating its assets under an orderly, long term plan.  RTL ceased acquiring tax certificates at public auctions in 2010.

The following table presents selected financial information for reportable business segments for the years ended December 31, 2016 and 2015.

	For the year ended December 31, 2016
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	823,779	$	8,706	$	832,485
Total deposits	$	629,546	$	—	$	629,546
Interest income	$	33,205	$	211	$	33,416
Interest expense		6,760		555		7,315
Net interest income (expense)	$	26,445	$	(344)	$	26,101
Provision for loan and lease losses		1,222		20		1,242
Total non-interest income		4,249		58		4,307
Total non-interest expense		19,494		503		19,997
Income tax benefit		(1,685)		(111)		(1,796)
Net income (loss)	$	11,662	$	(697)	$	10,965
Noncontrolling interest	$	510	$	80	$	590
Net income (loss) attributable to Royal Bancshares	$	11,153	$	(778)	$	10,375

	For the year ended December 31, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	774,258	$	14,025	$	788,283
Total deposits	$	577,892	$	—	$	577,892
Interest income	$	29,379	$	614	$	29,993
Interest expense		5,689		795		6,484
Net interest income (expense)	$	23,690	$	(181)	$	23,509
(Credit) provision for loan and lease losses		(846)		98		(748)
Total non-interest income		2,842		271		3,113
Total non-interest expense		19,751		1,234		20,985
Income tax expense		(5,139)		—		(5,139)
Net income (loss)	$	12,766	$	(1,242)	$	11,524
Noncontrolling interest	$	602	$	(71)	$	531
Net income (loss) attributable to Royal Bancshares	$	12,164	$	(1,171)	$	10,993

Interest income earned by the community banking segment related to the tax liens segment was approximately $555 thousand and $795 thousand for the year ended December 31, 2016 and 2015, respectively.